Whenever I’ve asked an executive of one of the big insurance companies why they’re interested in InsureTech (insurance technology) they’ve universally said ‘Google’. The insurance industry is already in a pretty difficult / profit-strained place, and it realises that they’re one knock-out disruptive punch from a technology giant like Google from obliteration. OK, obliteration may be overstating it, however technology undoubtedly has a habit of making fat / slow moving industries feel uncomfortable - just ask any London Cab driver about the impact of Uber on their livelihoods.
Having spent the last 10+ years working in advertising technology I’m hugely aware of the disruption a company like Google can have on a market. Google now owns 30.9% of all digital advertising revenues around the world (via its Adwords and ADX platforms), and 80% of publisher infrastructure (via its DFP product). Of course, it also owns 63.9% of search - which is where Google’s fortunes started.
In short, today Google owns digital advertising. But that wasn’t always the case. 15 years ago Google was just a couple of guys in a garage with an idea.
Given that Insurance companies are so worried about Google, I thought it would be interesting to chart Google’s meteoric rise to global advertising dominance to give some context, and providing some kind of indication of whether Google’s shaping to take the world of insurance in the same way it took over the advertising industry.
- 1998: launches search engine which quickly becomes popular
- 2000: works out how to monetise search results via sponsored listings ‘AdWords’ product
- 2003: grows non-Google owned advertising revenues (e.g. on 3rd party publisher websites) via launch of ‘AdSense’ through the purchase of Applied Semantics
- 2005: launches Google Analytics, as a 3rd party measurement service, based on technology acquired from Urchin. At the same time quietly acquires mobile operating system Android (an early prescient mobile bet)
- 2006: acquires YouTube seeing the future of video
- 2007: sees the future of the internet is mobile, and formally launches Android (after its previous acquisition in 2005) along with AdSense for mobile
- 2008: decides it wants to own the wider internet advertising plumbing on the supply side by acquiring ad technology company DoubleClick
- 2009: doubles down on mobile monetisation via the acquisition of mobile ad network Admob
- 2011: furthers its 3rd party publisher monetisation technology stack via the acquisition of Admeld
- 2014: acquires Nest, seeing the future of connected devices in homes
- 2015: Google becomes Alphabet, allowing to legitimately (from a brand and markets perspective) carry on its diversified investments
Data has been core of Google’s strategy from Day 1. Openly stating in its mission early on that Google was dedicated to ‘making information more accessible’. With its own platform it worked out how to monetise this data via its native ad product ‘adwords’. It then worked out how to monetise the web outside of its owned platform (and control major parts of both the supply and demand sides). Now that Google has a strong grasp of how pretty much everyone around the world interacts with the open web, and specifically what people’s ‘intentions are’ - as that’s what search is about, it’s about your intention to do something / know something.
Given Google knows pretty much everything about your virtual life via data, the biggest area that Google doesn’t know about, is what happens in your real life (although it can obviously infer a great deal). And that’s what I’d say Nest is about - putting sensors in people’s homes that generate data on people’s real-life behaviours. At present the use of this home behavioural data is inert, unused - in the same way that a person’s Google search results were a few years ago. And, it’s likely that Google will continue to play dumb and not do anything about this data for the near future, just as it did with Google search, YouTube and its other services.
I can guarantee that in the future Google will make a play to unify people’s virtual behavioural data with their real-life behavioural data, and with such a chunk of real-time and historic data of individual behaviour, along with aggregate meta trends and predictive AI-driven data, you can see how this puts Google in a hugely strong position to develop industry-changing insurance products.
That said, Google doesn’t win at every industry it enters - anyone remember Orkut, Google’s social network? The big insurance companies can either pray that Google gets insurance wrong, or work out how to beat Google at its own game. The main challenge for insurance companies is that insurance is an industry ultimately based around ‘data’, and Google has a particularly strong record of winning when data’s at play.